Ranking of Districts by Housing and Neighbourhood Characteristics
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Monitoring the Quality of Urban Life Eduardo Lora Based on work with Bernard van Praag, Andrew Powell and Pablo Sanguinetti Research Department Inter-American Development Bank October, 2009 Monitoring the urban QoL: The global approach THE QUALITY OF LIVING INDEX A report by Mercer Consulting 28 April 2009: According to new research, Vienna, Austria’s capital, is now the city most people would like to call their home. Swiss and German cities dominate top places of best cities in the world The ―Global Cities Index‖ produced by Foreign Policy, in conjunction with consulting firm A. T. Kearney and the Chicago Council on Global Affairs, ranks New York as the most global city. Monitoring the urban QoL: The global approach ―Specifically, the Global Cities Index ranks cities’ metro areas A few, key dimensions according to 24 metrics across five dimensions. The first is business activity: including the value of its capital (chosen by experts) markets, the number of Fortune Global 500 firms headquartered there, and the volume of the goods that pass through the city. The second dimension measures human capital, or how well the city acts as a magnet for diverse groups of people and talent. This includes the size of a city’s immigrant population, the number Objective data that of international schools, and the percentage of residents with allows comparability university degrees. The third dimension is information exchange—how well news and information is dispersed about and to the rest of the world. The number of international news bureaus, the amount of international news in the leading local papers, and the number of Rankings based on broadband subscribers round out that dimension. The final two areas of analysis are unusual for most rankings of some arbitrary globalized cities or states. The fourth is cultural experience, or the level of diverse attractions for international residents and travellers. That includes everything from how many major weighting sporting events a city hosts to the number of performing arts venues it boasts. The final dimension— political engagement—measures the degree to which a city influences global policymaking and dialogue. How? By examining the number of embassies and And BINGO! consulates, major think tanks, international organizations, sister city relationships, and political conferences a city hosts. We learned long ago that globalization is much more than the simple lowering of market barriers and economic walls. And because the Global Cities Index pulls in these measures of cultural, social, and policy indicators, it offers a more complete picture of a city’s global standing—not simply economic or financial ties.‖ Monitoring the urban QoL: The global approach The pros The cons – Visibility – No good guide – Comparability for policy – Usefulness for a decisions specific group of clients: – Don’t reflect the multinationals views and needs of the locals Monitoring the urban QoL: The local approach Monitoring the urban QoL: The local approach Monitoring the urban QoL: The local approach Monitoring the urban QoL: The local approach Monitoring the urban QoL: The local approach The cons The pros – Lack of granularity – Visibility (local) – Can reflect the – No ranking of views and needs needs/problems of the locals – An input for – Mix of subjective public policy and objective data debates without analytical framework Monitoring the urban QoL: The local approach improved… The neighbourhood approach Level of observation truly local: neighbourhood Emphasis on public goods, services and amenities Organized use of objective and subjective data Relative importance of QoL dimensions or their components not imposed on the data …but elicited with the help of two simple methods: – What the market recognizes as valuable: the hedonic price method – What affects people’s subjective well-being: the life satisfaction method The essence of the two methods The hedonic price method: House prices (p) depend on housing features (H) and neighbourhood features (Z) Ln pij = constant + γ1 Hi + γ2 Zj + vij, vij=δj + ηi The life-satisfaction method: Life satisfaction (LS) depends also on H and Z, plus individual-level variables (income, age, family size) LSij =a + b yij + c ageij + d ageij2 + e fsij + g Hij + h Zj + vij The essence of the two methods For any neighbourhood feature: Influences housing Does not influence prices: market housing prices: attaches a value to market does not it attach a value to it Has (separate) influence on well- being Does not have (separate) influence on well- being The essence of the two methods For any neighbourhood feature: Influences housing Does not influence prices: market housing prices: attaches a value to market does not it attach a value to it Has (separate) influence on well- being Does not have Markets function (separate) well: influence on well- access/distance to being transportation The essence of the two methods For any neighbourhood feature: Influences housing Does not influence prices: market housing prices: attaches a value to market does not it attach a value to it Has (separate) Markets function influence on well- only partially: being safety Does not have (separate) influence on well- being The essence of the two methods For any neighbourhood feature: Influences housing Does not influence prices: market housing prices: attaches a value to market does not it attach a value to it Has (separate) Market signals influence on well- don’t function, but being political system may sense needs: access to culture and recreation Does not have (separate) influence on well- being The essence of the two methods For any neighbourhood feature: Influences housing Does not influence prices: market housing prices: attaches a value to market does not it attach a value to it Has (separate) influence on well- being Does not have Potentially (separate) problematic: air influence on well- quality, traffic (!) being The essence of the two methods For any neighbourhood feature: Influences housing Does not influence prices: market housing prices: attaches a value to market does not it attach a value to it Has (separate) Markets function Market signals influence on well- only partially: don’t function, but being safety political system may sense needs: access to culture and recreation Does not have Markets function Potentially (separate) well: problematic: air influence on well- access/distance to quality, traffic (!) being transportation Monitoring the urban QoL: The neighbourhood approach in practice Through a competitive process, teams selected to analyze QoL in neighbourhoods in: Argentina: Buenos Aires Colombia: Bogota and Medellin Costa Rica: San Jose Peru: Lima Uruguay: Montevideo Monitoring the urban QoL: The neighbourhood approach in practice Each team: Selected neighbourhoods for pilot study Conducted surveys of individuals – Housing features – Income, socio-demographic – Satisfaction with life and other domains Collected data on neighbourhoods: – Socio-geographic – Public infrastructure, services, amenities (PISA) Estimated the hedonic regression of house prices Calculated the implicit market value of each and total PISA by neighborhood Estimated the life satisfaction regression Calculated the life satisfaction income-equivalent of each and total PISA by neighbourhood Using Hedonic Prices to Construct a Quality of Life Index by Neighbourhood. Metropolitan San Jose: Ranking of Districts by Housing and Neighbourhood Characteristics (Values are expressed in American Dollars) Housing and neighbourhood Neighbourhood Housing District characteristics characteristics characteristics Ranking Value Ranking Value Ranking Value Sanchez 1 370 1 27 1 343 San Rafael 2 285 2 9 8 275 Mata Redonda 3 275 10 -23 2 299 Carmen 4 264 11 -24 3 287 San Vicente 5 258 8 -20 6 277 Anselmo Llorente 6 254 13 -28 4 281 Top ten Top San Isidro 7 245 3 -5 23 250 San Pedro 8 238 20 -32 10 271 San Juan 9 237 16 -30 11 267 Sabanilla 10 237 35 -39 7 276 Alajuelita 42 172 48 -59 34 230 Hospital 43 169 40 -42 42 211 San Jocesito 44 166 46 -54 38 220 San Felipe 45 165 36 -40 46 205 Cinco Esquinas 46 164 28 -37 48 200 Patarra 47 154 15 -29 51 183 Bottom ten Bottom San Juan de Dios 48 148 50 -62 45 210 Tirrases 49 144 51 -67 43 211 Concepcion 50 143 49 -61 47 204 Aserri 51 143 47 -57 49 199 Valuing Neighbourhood Characteristics using the Life-Satisfaction Approach: Buenos Aires Monthly income compensation Neighbourhood dummies in % USD Avellaneda 0 0 Caballito -1,47 -11,66 Palermo -1,28 -10,15 Neighbourhood characteristics Annoying noise during the day 0,38 3,01 Good sidewalk conditions when raining -0,38 -2,99 Good conditions of pavement-streets -0,40 -3,13 Cultural and sports activities -0,22 -1,75 Amount and quality of green areas -0,32 -2,51 Low Traffic in neighbourhood -0,23 -1,86 Security during the day -0,45 -3,59 Evaluation of neighbuors -0,64 -5,10 Payphones -0,35 -2,78 Income compensation for change from average to own neighbourhood Neighbourhood Average income QoL Index monthly USD Neighbourhood USD Avellaneda -319 763 Caballito 463 807 Palermo 455 866 San Cristobal -558 704 Questions that may be addressed with the neighbourhood approach What is the value of public goods? What urban problems have the greatest impact on people’s well-being? Which homeowners derive the greatest economic benefit from the public provision of infrastructure or services? Is the city improving or growing worse in areas that matter to people? Questions that may be addressed with the neighbourhood approach In what parts of the city is it most feasible for homebuilders to seek solutions to urban problems such as inadequate road infrastructure, a lack of recreation areas or poor safety conditions? Which of a city’s problems should be addressed first by government authorities in light of their impact on the well- being of various groups of individuals and in light of the ability of private initiative to respond? When can or should property taxes be used to finance the provision of certain services—or the solution of certain urban problems? .